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End of Week Report: Gold Fails to Break $1,800 an ounce

Gold’s failure to break $1,800 an ounce this week, along with positive U.S. economic data, had many investors looking to cash out gains. This week’s retail sales data shows Americans bought more of everything in September and could indicate greater than expected growth in the third quarter. “The University of Michigan data on Friday, retail sales today — it all adds up to suggest that the U.S. economy is starting to step in line, and the downward revisions we saw in the past half of the year may be coming to an end,” Danske Bank analyst Christin Tuxen said. This week also saw positive news out of China indicating reduced inflation and growing exports. As the United States election draws near, the economy is by far the number one topic of debate. This week’s reports from the Federal Reserve shone a positive light on the U.S. economy, as industrial production rose in September. Reports have shown that consumer spending and the housing markets have also improved. “The economy is regaining momentum it appeared to have lost in the spring,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh.

EUROPEAN SUMMIT MOVES THE MARKET:

Gold is set to end the week down as the euro softened in anticipation of the EU summit’s closing in Brussels. Plans for immediate assistance to the profoundly struggling nations of Greece and Spain went largely unmentioned as the falling euro dragged Gold down with it. Though the metal has descended sharply from recent highs near $1,800, many analysts are still bullish on Gold for the long-term. “There is a clear lack of momentum in the Gold price at the moment,” BNP Paribas analyst Anne-Laure Tremblay said. “The recent correction from $1,800 to $1,735, and possibly a bit lower, is likely to be a temporary pause in a wider upward trend.” French President Francois Hollande believes the eurozone is “on track” to fixing the problems in the region, but he’s not fooling anyone. A statement from the summit claimed that banking supervision was coming, but as Alex White of JPMorgan said, “The statement repeated the passage from the June summit word for word – indicating how little progress has been made. While France and the periphery continue to see banking sector support coming early next year, the German vision still looks like it is based around a timeframe from 2015 and beyond.” If this is true, it could be more than two years before the eurozone is on track again.

AFRICAN MINING SUSPENDED:

Africa’s leading Gold mining operation has been suspended as a reported 19,500 of the 26,700 workers have gone on strike. “The current impasse is extremely unfortunate, not only for the industry and its employees, but also for future growth and development in South Africa, given the critical role that Gold mining plays in our country’s economic development,” Elize Strydom, the mines chamber’s senior executive for employer relations, said in an emailed statement. South Africa was the fifth-largest Gold producing country in 2010.